In 2010, with its economy surging and the state companies planning to expand internationally, China had set its eyes on Latin America. This region didn’t have much capital, but it was quite rich in the natural resources which China lacked. This resulted in a new record of $35 billion state-to-state loans in 2010.
Chinese Loans Decline In Latin America Due To The Pandemic
Coming back to 2021, the once-torrid blooming relationship, which was maturing in multiple ways, now has dried up, suggesting that China is growing wary of the partner who has done nothing wrong with its partner.
China’s two biggest banks of policy – the Export-Import Bank of China and the China Development Bank (CDB) for the first time in fifteen years did not make any new loans in this region in 2020. This is capping the multiple layers of the slum, which is due to Latin America’s declining economic slide.
The Inter-American Dialogue prepared a report from which this data comes. The Boston University’s Global Development Policy Center and a Washington think tank state that both of them have been tracking China’s yuan diplomacy for years in Washington’s backyard.
China’s diplomatic and economic influence in Latin America has worried the U.S. policymakers, who are looking at various measures to curb China’s policy. This task has now fallen to the Biden administration that has warned Chinese footprint in this region is a security threat to the nation. But China has displaced the U.S. from the top trading partner from many South American nations, and catching to that spot won’t be an easy task.
As per the research, the U.S. might have fallen even behind during the Covid-19 pandemic when China has donated supplies amounting to $215 million. That included thermal imaging technology to surgical gloves to all of its allies in this region. In comparison, the U.S. agency of International Development and State Department has offered supplies amounting to $153 million. China has already conducted many clinical plans or trials for manufacturing vaccines in these countries – Peru, Mexico, Chile, Brazil and Argentina.
Without any doubt, the region’s Covid-19 response is a Chinese face, as said by a Boston University economist, Rebecca Ray, who is also the author of the new report. This is a missed opportunity for the Americans. Since the going down of U.S. manufacturing in the early 1990s, there is no way to compete with these Chinese. Most of the medical supplies from China reach Latin America, so everyone is buying from China.
This pandemic has opened a number of doors from the much welcomed Chinese aid, but this makes it harder for various governments to repay their bills to Beijing. There was a big 7.4% recession in the Caribbean and Latin America which has wiped out a decade of the growth as the information by International Monetary Fund data.
China has got a hit with the borrowers squeezed. Last year, Ecuador already negotiated to delay the $900 million debt payment by a year which is serviced by the oil shipments. Venezuela is one of the biggest borrowers, which also has got a year’s grace period.
Since this region is facing some unprecedented challenges, China won’t be lending any more sum, for now, that is said at the Dialogue by Margaret Myers, who is head of the Asia-Latin America program. Now it is grappling with a problematic portfolio of its own.
This slow lending to Latin America has a global and broader effect on Latin America as China has turned inward to boost its own economy due to the pandemic. The current party of China has lent billions of dollars from Africa to Asia, Latin America and Europe to expand its access to various markets.